Rosenberg v. DVI Receivables XIV, LLC, 14–14620.

• Decision Date: 08 April 2016
• Docket Number: No. 14–14620.,14–14620.
• Citation: 818 F.3d 1283
• Parties: Maury ROSENBERG, Plaintiff–Appellant Cross Appellee, v. DVI RECEIVABLES XIV, LLC, DVI Receivables XVI, LLC, DVI Receivables XVII, LLC, DVI Receivables XVIII, LLC, DVI Receivables XIX, LLC, DVI Funding, LLC, U.S. Bank, NA.A. et al., Defendants–Appellees Cross Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

818 F.3d 1283

Maury ROSENBERG, Plaintiff–Appellant Cross Appellee,

v.DVI RECEIVABLES XIV, LLC, DVI Receivables XVI, LLC, DVI Receivables XVII, LLC, DVI Receivables XVIII, LLC, DVI Receivables XIX, LLC, DVI Funding, LLC, U.S. Bank, NA.A. et al., Defendants–Appellees Cross Appellants.

No. 14–14620.

United States Court of Appeals, Eleventh Circuit.

April 8, 2016.

Paul J. Battista, William Barry Blum, Allison R. Day, Michael A. Friedman, Carlos E. Sardi, Genovese Joblove & Battista, PA, Miami, FL, for Plaintiff–Appellant, Cross Appellee.

Larry I. Glick, Peter H. Levitt, Shutts & Bowen, LLP, Miami, FL, for Defendants–Appellees, Cross Appellants.

Before MARCUS, JILL PRYOR and FAY, Circuit Judges.

MARCUS, Circuit Judge:

At issue today is whether a federal district court is obliged to follow the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure when trying a bankruptcy case arising under title 11 of the United States Code. In entertaining the defendants' Fed.R.Civ.P. 50(b) motion for judgment as a matter of law after a jury trial, the district court applied the filing deadline found in the Federal Civil Rules (no later than 28 days after the entry of judgment) and thus found the motion timely. We disagree and hold that when trying a case arising under title 11, a district court (just like a bankruptcy court) must apply the filing deadline found in the Federal Rules of Bankruptcy Procedure when addressing a Rule 50(b) motion. Because, under the Federal Bankruptcy Rules, the defendants' Rule 50(b) post-trial motion was untimely—Fed. R. Bankr.P. 9015(c) requires that such motions be filed no later than 14 days after entry of judgment—we vacate the district court's order granting the defendants relief and remand with instructions to reinstate the jury's award.

I.

This case comes before us with a complex factual and procedural history.¹ The essential facts are these. In November 2008, Jane Fox—on behalf of several companies ("the DVI Entities") that had entered into equipment leases with Maury Rosenberg in connection with his chain of medical imaging centers—filed an involuntary Chapter 7 bankruptcy petition against Rosenberg, asserting a claim based on an individual limited guaranty Rosenberg had made in connection with the leases. The petition was originally filed in the United States Bankruptcy Court for the Eastern District of Pennsylvania, but was later transferred to the Bankruptcy Court for the Southern District of Florida. In August 2009, the bankruptcy court granted Rosenberg's motion to dismiss the petition because the DVI Entities were not eligible creditors and, alternatively, because they were judicially estopped from prosecuting the case. Although it dismissed the petition with prejudice, the bankruptcy court retained jurisdiction to award Rosenberg his costs, reasonable attorney's fees, and damages (if appropriate) under 11 U.S.C. § 303(i).

In December 2010, Rosenberg filed an adversary complaint against the defendants under 11 U.S.C. § 303(i). Section 303(i) acts to discourage creditors from improperly filing involuntary petitions by providing:

If the court dismisses a petition under this section other than on consent of all petitioners and the debtor, and if the debtor does not waive the right to judgment under this subsection, the court may grant judgment—

(1) against the petitioners and in favor of the debtor for—

(A) costs; or

(B) a reasonable attorney's fee; or(2) against any petitioner that filed the petition in bad faith, for—

(A) any damages proximately caused by such filing; or

(B) punitive damages.

11 U.S.C. § 303(i). Specifically, Rosenberg sought: (1) attorney's fees and costs incurred while defending the involuntary petition; (2) compensatory and punitive damages caused by filing the petition in bad faith; and (3) attorney's fees and costs incurred while prosecuting the adversary proceeding itself.

In March 2012, Rosenberg demanded a jury trial on all triable issues in his adversary proceeding. The defendants did not consent to a jury trial in the bankruptcy court, but, instead, moved the district court to withdraw the reference of the adversary proceeding so that the matter could be tried in district court. The district court granted the motion, withdrew the reference of the claims for damages under § 303(i)(2) because they were analogous to common-law claims for malicious prosecution, and tried the case to a jury. Meanwhile, Rosenberg's claims for attorney's fees and costs remained in the bankruptcy court. After trial in the district court, the jury found that the defendants acted in bad faith when they filed the involuntary petition and awarded Rosenberg $1,120,000 in compensatory damages (for emotional distress, loss of reputation, and loss of wages) and $5,000,000 in punitive damages. The district court entered a "final judgment" on its docket on March 14, 2013.

The defendants then moved for judgment as a matter of law under Fed.R.Civ.P. 50(b)28 days later. Although the motion had been timely filed under Fed.R.Civ.P. 50(b), which allows parties 28 days to file a motion, Rosenberg moved to strike the motion as untimely because it fell outside the time limit provided for filing a Rule 50(b) motion under Fed. R. Bankr.P. 9015(c), which, in turn, requires that such motions be filed no later than 14 days after the entry of judgment. The district court concluded that the Federal Civil Rules applied and that the Rule 50(b) motion had been filed timely; therefore, it denied the motion to strike.

Turning to the merits, the district court granted the Rule 50(b) motion, concluding that while the evidence supported a finding of bad faith and emotional damages, it did not sustain the verdict for punitive damages or compensatory damages for loss of reputation and loss of wages. Accordingly, the district judge entered an amended final judgment holding the defendants liable only for $360,000 in compensatory damages for emotional distress.

Rosenberg appealed, arguing that the defendants' Rule 50(b) motion was filed untimely and, therefore, the merits of the claim should not have been considered at all. Moreover, Rosenberg claims that even if the motion had been properly considered, the district court erred in its application of Rule 50(b). The defendants, in turn, cross-appealed, claiming that the district court also should have overturned the jury's finding of liability for bad faith, and a damages award for emotional distress was improper because of our ruling in Lodge v. Kondaur Capital Corp., 750 F.3d 1263 (11th Cir.2014).

II.

The central issue in this case is whether the defendants timely filed a Rule 50(b) motion for judgment as a matter of law. This requires us to decide whether the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure apply to the timeliness of perfecting a Rule 50(b) motion filed in a district court trying a bankruptcy case arising under title 11. We review de novo the district court's conclusion that the deadline in the Federal Civil Rules applies. In re Mouzon Enters., Inc., 610 F.3d 1329, 1332 (11th Cir.2010) ; Mega Life & Health Ins. Co. v. Pieniozek, 585 F.3d 1399, 1403 (11th Cir.2009).

Under the Federal Civil Rules, a party must file its post-trial motion "[n]o later than 28 days after the entry of judgment." Fed.R.Civ.P. 50(b). But under the Federal Bankruptcy Rules, "any renewed motion for judgment or request for a new trial shall be filed no later than 14 days after the entry of judgment." Fed. R. Bankr.P. 9015(c).² Here, final judgment following the jury trial was entered by the district court on March 14, 2013. The defendants filed their renewed motion for judgment as a matter of law on April 11, 2013. Thus, 28 days passed between the entry of judgment and the filing of the motion. This filing would be timely under Rule 50(b), but would be 14 days delinquent under the Federal Bankruptcy Rules. Because the district court was required to apply the Federal Bankruptcy Rules and the deadline set forth in Fed. R. Bank. P. 9015(c), the defendants' motion was not timely and, therefore, should have been denied.

It is, by now, axiomatic that in interpreting the federal rules, we look first to their plain language. See In re Yates Dev., Inc., 256 F.3d 1285, 1288 (11th Cir.2001) (citing Cmty. for Creative Non–Violence v. Reid, 490 U.S. 730, 739, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989) ). The plain language of the federal rules—of bankruptcy and civil procedure—requires application of the Federal Bankruptcy Rules in this case. Fed. R. Bankr.P. 1001 unambiguously provides that, "[t]he Bankruptcy Rules and Forms govern procedure in cases under title 11 of the United States Code.... These rules shall be construed to secure the just, speedy, and inexpensive determination of every case and proceeding." Rule 1001 was amended in 1987 for the specific purpose of expanding the reach of the rules beyond the bankruptcy courts to all courts hearing bankruptcy matters. Thus, the advisory committee notes to the rule read, "This amended Bankruptcy Rule 1001 makes the Bankruptcy Rules applicable to cases and proceedings under title 11, whether before the district judges or the bankruptcy judges of the district." Fed. R. Bankr.P. 1001 advisory committee's note to 1987 amendments.

There is no dispute that this case arises under title 11. Rosenberg asserted claims under 11 U.S.C. § 303, and we think it is beyond debate that a case arises under title 11 when it involves a cause of action created or determined by the statutory provisions found in title 11. At no point in these proceedings has any party disputed that the case arises under title 11; nor, indeed, have they offered any reason why Rule 1001 would not apply.

Moreover, the Federal Rules of Civil Procedure provide for the primacy of the Federal Bankruptcy Rules in bankruptcy proceedings adjudicated in district court. Fed.R.Civ.P. 81(a)(2) ("These rules apply to bankruptcy proceedings to the extent provided by...